Davao Central Warehouse Club v. Chaty Aboyme

Summary

This case involved the validity of a 5-year employment contract (MOA) between Davao Central Warehouse Club and employee Chaty Aboyme, who resigned after 5 months. The employer sued for breach seeking PHP500,000 in liquidated damages and training expense refunds. The Supreme Court declared the MOA void ab initio as a contract of adhesion that violated public policy and constitutional prohibitions against involuntary servitude. The Court found the employee was forced to sign without understanding the terms, worked in a different capacity than contracted, and the contract's one-sided provisions favoring the employer violated the mutuality of contracts principle. The decision affirmed awards of PHP50,000 moral damages, PHP50,000 exemplary damages, and PHP30,000 attorney's fees to the employee, with 6% annual interest. The ruling reinforces that employment contracts cannot circumvent labor protections through unconscionable terms and that employees retain the fundamental right to resign.